Are You A "Tax Turtle" If You Live In Your Truck?
Can you claim per diem expenses if you live in your truck ?
There are frequent posts on trucker social media forums and even in trucking publications that suggest merely having a post office box will be sufficient to meet the IRS’ regulations for claiming travel-related expenses. However, if you are an over-the-road truck driver who lives in the truck when you are "home" you may be a classified a "tax turtle" by IRS and unable to claim travel-related expenses, which includes per diem.
Self-employed truck drivers subject to DOT hours of service regulations are entitled to claim:
meals and incidental expenses, and
other travel-related expenses as a tax deduction[i].
To claim travel expenses a trucker must have a tax home in a real and substantial sense.
A trucker that fails to meet these criterion is considered a “tax turtle”, an itinerant or someone who has a home wherever he or she happens to be working[ii].
A "tax turtle" is not entitled to claim away-from-home travel expenses.
According to the Taxpayer Advocate Service sole-proprietorship trade or business expense deductions are the most litigated issue before the US Tax Court
Would John be classified a "tax turtle"?
John was an OTR truck driver for the year under audit,
He was away from home for 358 days, and
Exceeded having merely a PO Box - he claimed to live with his mother[iii]
Tax Court inquiry
Whether John had a tax home and whether his mother’s house was indeed his permanent residence were factual questions:
He made only one visit to stay with his mother during the year in question, and
the visit lasted three days while he served jury duty.
On the five other occasions on which John visited the Kansas City area, he slept in his truck that he parked in a casino parking lot.
Additionally, John kept no belongings at his mother’s house; instead, he kept them in a rented storage locker.
Most significantly, John bore no expenses in maintaining a home.
He paid no money for rent, utilities, or any other household expenses during the year under audit.
US Tax Court ruling
John was a “tax turtle” who was not entitled to claim per diem and travel-related expenses.
As this case demonstrates the PO Box gambit will not survive scrutiny in a tax audit. For a self-employed truck who lives in their truck to claim travel-related expenses, like per diem, some amount of expenses must be incurred at your declared tax home. It would also be wise to spend some time there lest you risk being classified a “tax turtle”.
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Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
[i] IRS Rev. Proc. 2011-47 (most recently superseded by 2017-42) & IRC 162(a)(2); Reg 1.162-2) A tax deduction is allowed for ordinary and necessary traveling expenses incurred by a taxpayer while away from home in the conduct of a trade or business. A truck driver is not away from home unless his or her duties require the individual to be away from the general area of his or her tax home for a period substantially longer than an ordinary workday and it is reasonable to need rest or sleep.
[ii] Rev. Ruling 75-432
[iii] HATEM ELSAYED, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 8935-07S. Filed May 26, 2009